Take a Look at the Latest Financial Organization Fined for Failing to Flag Unethical Trading

Take a Look at the Latest Financial Organization Fined for Failing to Flag Unethical Trading
Cover Image Source: A general view of the London offices of the JP Morgan Chase & Co financial company | Photo by Leon Neal | Getty Images

Although financial institutions and banks are seen as pillars supporting economic stability across the globe, they are often pulled up for negligence that leads to major fiascos. The latest entity to face regulatory action is JPMorgan Chase & Co, which has been slapped with a $348.2 million fine for failing to maintain accurate records of trading transactions. This indicates that they failed to flag unethical activity in the market on both their trading and the trading of their clients. According to the Federal Reserve, $98.2 million of this total is due to the lack of an adequate system in place to monitor trading operations. They were penalized $250 million by the Office of the Comptroller of the Currency. The company's stock, JPM saw a 1.2% decline in recent trades after this announcement. “The OCC found that JPMC operated with gaps in trading venue coverage and without adequate data controls required to maintain an effective trade surveillance program,” the OCC said in a statement.

Image Source: A man visits the display stand of American financial institution J.P. Morgan during | Photo by Emanuele Cremaschi | Getty Images
A man visits the display stand of American financial institution J.P. Morgan | Photo by Emanuele Cremaschi | Getty Images

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Since at least 2019, JPMorgan Chase's trade surveillance program hasn't been up to the mark, according to the Office of the Comptroller of the Currency (OCC). They discovered a few issues that have decreased the program's efficacy. One of the problems is that the bank failed to take appropriate control of the locations where trading occurs. Furthermore, they failed to monitor billions of trade events across at least thirty international trading platforms.

According to a JPMorgan Chase representative, the bank identified the issue and conducted a comprehensive investigation. They said that because of the withheld data, they were unable to discover any proof of employee misconduct or harm to customers or the market. The spokeswoman promised that customers shouldn't have any service interruptions as a result of these fines in an email to MarketWatch. This comes after the bank revealed in February that it expected to pay fines totaling nearly $350 million for failing to keep accurate records in its corporate and investment banking divisions.

Image Source: A man walks inside one of the JPMorgan Chase & Co. buildings | Photo by Eduardo Munoz Alvarez/VIEWpress | Getty Images
A man walks inside one of the JPMorgan Chase & Co. buildings | Photo by Eduardo Munoz Alvarez/VIEWpress | Getty Images

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Trade surveillance is the monitoring of financial firms and their workers' securities trading activity to identify and stop market manipulation, insider trading, abuse of the market, and other illegal activities. It is vital for preserving honest and open markets, maintaining the integrity of financial institutions, and fostering investor trust.

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Trade is strictly regulated by governments for several reasons:

1. Revenue control: Governments can appropriately estimate the worth of products and collect taxes by keeping track of international trade transactions. This maintains equitable revenue collection and fosters a safe atmosphere for trade.

2. Protection against illicit trade: Trade surveillance guards trade routes, stops illicit activities, and identifies suspicious activity such as smuggling of contraband.

3. Trade promotion and development: Governments can build infrastructure and regulations to assist companies in international trade, generating growth and opportunity, by evaluating trade data.

4. Economic insights: Governments can make well-informed decisions for economic development and stability by keeping an eye on import-export data, which offers useful insights into economic patterns.

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